Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Mohawk Industries, Inc.'s (NYSE:MHK) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Despite a decline, did MHK underperform the long-term trend and the industry?
MHK's trailing twelve-month earnings (from 28 September 2019) of US$706m has declined by -19% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 9.3%, indicating the rate at which MHK is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the whole industry is feeling the heat.
In terms of returns from investment, Mohawk Industries has fallen short of achieving a 20% return on equity (ROE), recording 9.1% instead. Furthermore, its return on assets (ROA) of 5.6% is below the US Consumer Durables industry of 6.7%, indicating Mohawk Industries's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Mohawk Industries’s debt level, has declined over the past 3 years from 17% to 9.5%.
What does this mean?
Though Mohawk Industries's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Mohawk Industries to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MHK’s future growth? Take a look at our free research report of analyst consensus for MHK’s outlook.
- Financial Health: Are MHK’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 28 September 2019. This may not be consistent with full year annual report figures.
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